Chart Reviews Without Service Records May Cause Improper Payments

December 16, 2019 - The Office of the Inspector General’s (OIG’s) recent study on Medicare Advantage (MA) payments analyzed whether MA organizations are raising their risk-adjusted payment rates in reaction to chart reviews and found that nearly half MA organizations added services that were not substantiated by service records.

“Billions of estimated risk-adjusted payments supported solely through chart reviews raise potential concerns about the completeness of payment data submitted to CMS, the validity of diagnoses on chart reviews, and the quality of care provided to beneficiaries,” OIG stated.

OIG acknowledged that risk-adjusted payments can cause imbalanced incentives. While CMS pays MA organizations more in capitated payments for a severely ill patient to allow the MA organization to provide a higher quality of care, MA organizations are instead incentivized to make patients look sicker than they are to receive higher payments.

MA organizations may pursue higher capitated payments when conducting chart reviews on patients’ conditions to erase erroneous service submissions and input any service records that had not yet been added. This information is then submitted to CMS’s encounter data system to be reviewed for risk-adjusted payments. Not all submissions garner a risk-adjusted payment—they must be supported by a face-to-face consultation.

Comparing MA organization’s 2016 chart reviews to service records, OIG found that MA organizations may have received $6.7 billion for the number of diagnoses that MA organizations reported on chart reviews that were not supported by any service records.

CMS paid $2.7 billion for diagnoses that were not accompanied by an in-person consultation or service record.

According to OIG, 99 percent of the time MA organizations are using their chart reviews to add diagnoses, not remove erroneous submissions.

The problem was not limited to a handful of organizations. In 2016, nearly half of the MA organizations had submitted payments that were not accompanied by a service record over the whole year. However, OIG mentioned, the instances were low within the organizations.

OIG is concerned that these administrative gaps could lead to higher improper payments. The improper payment rate could already exceed 20 percent of federal spending, according to a study published by George Mason University’s Mercatus Center earlier this month.

The $75 billion in improper payments could be attributable in large part to flawed Medicaid expansion eligibility recording, though experts conflict regarding how much this contributes. The OIG report may indicate that risk-adjusted payments had a hand as well.

OIG indicated that such widespread failure to correctly support encounter data with service records and chart reviews could also indicate that MA organizations are not submitting the information as they should, leading to flawed data.

In April 2019, the GAO found that 2017’s improper payment rate in Medicare may have been boosted by certain program documentation requirements. GAO recommended that CMS design a process to review documentation requirements.

“The substantial variation in Medicare and Medicaid estimated improper payment rates for the services we examined raise questions about how well the programs’ documentation requirements ensure that services were rendered in accordance with program coverage policies,” the GAO report said.

OIG is also concerned that the lack of service records for allegedly high-risk patients could also mean that these patients are receiving a low quality of care.

Apart from MA organization documentation issues, OIG took issue with CMS’s reviewal process. Through a questionnaire, OIG found that CMS failed to review how chart reviews were affecting risk-adjusted payments, nor did the agency analyze how the lack of service records might be affecting the quality of care. CMS also has yet to compare chart reviews and medical records in an audit, despite an audit update in October 2018.

OIG’s recommendations include greater oversight of MA organizations that received risk-adjusted payments due to services that had no service records, verify encounter data through audits, and that they assess the effects of allowing MA organizations to enter chart reviews without accompanying service records. CMS has agreed to all recommendations.